WSJ What’s News - U.S. Warns Iran Against Major Attack on Israel

Episode Date: August 8, 2024

P.M. Edition for Aug. 8. The U.S. has warned Iran that it could suffer a devastating blow if it were to mount a major attack against Israel. And banking reporter Gina Heeb says a newly declining mortgage rate could provide some relief in the U.S. housing market. Plus, the U.K.’s Competition and Markets Authority is seeking to establish whether Amazon’s investment in AI company Anthropic should be considered a de facto merger that might stifle competition. Pierre Bienaimé hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Introducing TD Insurance for Business with customized coverage options for your business. Because at TD Insurance, we understand that your business is unique, so your business insurance should be too. Contact a licensed TD Insurance advisor to learn more. The Biden administration warns Iran against a major attack on Israel. And mortgage rates in the U.S. have finally ticked down a notch, but housing supply remains tight. Inventory is the space to keep an eye on. That's very much a structural issue that's been of concern.

Even if rates go down, that number needs to continue to go up. Plus, why Big Tech is opening its wallet wide to bail out struggling AI startups. It's Thursday, August 8th. I'm Pierre Bienemé for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that moved the world today. The US has warned Iran that its newly elected government and its economy could suffer a devastating blow if it were to mount a major attack against Israel.

That's according to a U.S. official. The official said the warning has been communicated directly as well as through intermediaries, without giving any specifics. The Biden administration has been mounting an intensive campaign to discourage Iran, its proxies, and Israel from undertaking military action that would escalate tensions in the region, as Washington tries to salvage prospects of a ceasefire in Gaza. But the US has also made clear it is ready to use force to defend Israel. This week, its military said that stealthy F-22 fighter jets have been deployed to a

base in the Middle East. The US Navy has also sent more ships to the region. US officials don't know for sure whether Hezbollah, a militia based in Lebanon, plans to attack at the same time as Iran in a coordinated offensive or separately. Iranian President Massoud Pesakian, who was sworn in just last week, is thought to be open to renewing dialogue with the West. Fundamental policy, however, has long been set by Ayatollah Ali Khamenei, Iran's supreme leader.

Mortgage rates in the U.S. have fallen to a 15-month low, raising hopes for relief in the housing market. According to a survey of lenders out today by mortgage finance giant Freddie Mac, the average rate on the standard 30-year fixed mortgage fell around a quarter percentage point to 6.47%. Gina Hebe covers banking for The Wall Street Journal, and she joins me now. Gina, mortgage rates roughly doubled since the Federal Reserve began its campaign to curb inflation more than two years ago.

Why are they falling now? Recently, investors have been ramping up bets that the Federal Reserve will cut its benchmark interest rate. And while that is not directly tied to where mortgage rates go, mortgage rates tend to follow the yield on the benchmark 10-year Treasury note, and that has been falling lately. We saw some market action last week after there was some weaker than expected economic data and based on that data people think that the economy could slow a bit more than expected and we saw market sell off and then we saw yields go down as well. Home sales fell

also to their lowest level in nearly three decades last year. They've been similarly sluggish this year. Are falling mortgage rates enough to turn that around? It's hard to tell just yet. Lower mortgage rates will certainly help some Americans who have found homeownership to be completely unaffordable after rates went up. But there are a couple of different factors at play here and mortgage rates are just one.

Mortgage rates are still around double what they were before the Federal Reserve started to raise interest rates. So while this decline will be helpful, it's important to note that they're still elevated. And then there's also the inventory side of the question. So what supply of homes are out there? And that's been very low for a while now. It's risen a bit in recent months, but still below historical norms. And how have prospective buyers been acting lately? So we did see mortgage applications rise last week, but most of that was driven by refinance activity.

That's according to data from the Mortgage Bankers Association. So people are springing into action when it comes to refinancing current mortgages, but they're a bit more hesitant when it comes to new mortgages, and that could be because a lot of people expect that rates will continue to decline and they might just be waiting on the sideline a bit longer for that. Are there any other factors we should be looking at as far as the future of the housing market goes? Inventory is the space to keep an eye on. That's very much a structural issue that's been of concern. Even if rates go down, that number

needs to continue to go up. We just need more supply out there in order to keep prices in check, because when there's low supply, prices remain very high. Those have been near record levels, even though rates are very high as well. And with more people getting back into the market, they could continue to stay elevated. That was Wall Street Journal banking reporter Gina Hebe.

And let's have a look at the U.S. markets. The S&P 500 posted its best day in nearly two years after a better than expected jobless claims report helped ease fear that the labor market is weakening. Initial jobless claims, a proxy for layoffs, were 233,000 during the week ended August 3. That's down from the prior week's recent high of 250,000. The S&P 500 closed up 2.3%, its biggest single-day gain since November 2022. The Nasdaq jumped 2.9 percent, while the Dow Jones industrial average was 1.8 percent higher. Today's action came as a relief to many after the

most volatile week in years. Coming up, antitrust officials in the UK are scrutinizing Amazon's biggest-ever investment in another company, the AI startup Anthropic. That's after the break. So what's it like to buy your first cryptocurrency on Kraken? Well, let's say I'm at a food truck I've never tried before. Am I going to go all in on the loaded taco? No, sir. I'm keeping it simple. Starting small. That's trading on Kraken. Pick from over 190 assets and start with the 10 bucks In a freewheeling press conference at his Mar-a-Lago estate this afternoon, former President Donald Trump called for three presidential debates against Vice President Kamala Harris. The Republican candidate said he agreed to a September 4th debate on Fox News, a September 10th debate on ABC, and a third on NBC on September 25th.

A representative for Harris didn't immediately respond to a request for comment. Harris has previously said she'll show up to the September 10th debate. ABC said Harris and Trump both confirmed that they will attend that debate. NBC declined to comment. Fox didn't immediately respond to a request for comment. Trump also criticized Harris as dodging the news media. Nearly three weeks since Biden dropped out, the vice president has yet to sit for an interview or take public questions from reporters. The Harris campaign shot back that Trump hasn't kept up as rigorous a schedule

and accused him of focusing on grievances rather than discussing a vision for the country. Anti-trust officials in the UK are probing into Amazon's investment in an AI startup over concerns about a threat to competition. Amazon has poured about $4 billion into Anthropic, gaining a minority ownership position in the company. The probe is the latest foray by European regulators into ties between US tech giants and AI startups.

An Amazon spokesperson said the company was disappointed by the decision and that its ties to Anthropic didn't raise any competition concerns or meet the regulator's own threshold for review. A spokesperson for Anthropic said the startup remained independent since Amazon doesn't have a seat on its board or any board observer rights. An initial decision from the regulator is due by October 4th. Big tech firms have been splurging on AI startups for years to get their hands on what they see as promising features they hope to cash in on in the future.

But those investments are increasingly the focus of regulators on both sides of the Atlantic. And AI startups raised billions of dollars last year on the back of the latest tech-driven boom, but many of them are now struggling to survive, and they're asking Silicon Valley's biggest companies to bail them out. At least three such startups have been acquired under deals that are skirting the typical regulatory process. Wall Street Journal reporter Berber Jinn spoke to our tech news briefing podcast about these so-called aqua-hires and what makes them different this

time around. Essentially, these big companies are doing aqua-hires but with a really big twist. Companies like Google and Microsoft and Amazon, they've each done a particular type of deal where yes, they are trying to acquire the talent behind these startups, but they're also paying these really big licensing fees to get access to the startups underlying AI technology and also buy out the early investors in these startups. Typically, acquihires are much cheaper than traditional acquisitions, but what you're

seeing here is that big tech companies are essentially paying the price that would be a traditional acquisition price, and they're getting almost everything they would get through a traditional acquisition. And the prices they're paying are so high that investors are essentially getting paid back and sometimes at a premium from what they invested in. And you can hear more from Berber in today's episode of our Tech News Briefing Podcast. Meanwhile, U.S. colleges are racing to prepare students for the AI workplace. On the job search platform for college students Handshake, the share of job descriptions that

mention ChatGPT and other generative AI tools has tripled in the past year. And schools are revamping courses and adding specialized degrees at speeds rarely seen in higher education. Some are even going so far as to emphasize that all undergraduates get a taste of the tech, teaching them how to use AI, as well as about its failings and unethical applications. Wall Street Journal reporting intern Mila Serjati spoke to our Your Money Briefing podcast. Employers increasingly want their hires to have AI skills, and colleges are hearing about this.

So as of December, there's a statistic from the Work Trend Index from Microsoft and LinkedIn that 66% of business leaders said they wouldn't hire someone without AI skills. So colleges are really looking at the rise in generative AI in the workplace and seeing that they have to prepare their students. A professor at Harvard Business School that I talked to, Joseph Fuller, who researches the future of work, described AI literacy as the modern equivalent of typing in the 1970s and 80s, so this universal skill

that all students going into all fields of work should have. And so he says that job seekers should demonstrate that they can interact with a tool like ChatGBT and figure out how to prompt it to get the most accurate and thorough results. And so that's what students are going to learn from these AI courses. A big part of it is also knowing when AI is wrong because AI still makes a bunch of mistakes. Anthony Comegna You can hear more about how colleges are revamping their offers on today's Your Money Briefing podcast. News Corp, the owner of Dow Jones Newswires and The Wall Street Journal, has a content

licensing partnership with OpenAI, the developer of ChatGPT. And that's what's news for this Thursday afternoon. Today's show was produced by Anthony Bansi with supervising producer Michael Kosmides. I'm Pierre Bienemay for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.